In my private mentor program – I am obsessed with making sure all private clients understand their Profit and Loss incredibly well.
A thorough understanding of your P and L lets you make very accurate decisions regarding what wages you can pay to team members, how much you can afford to spend on clinic supplies, when you can afford to take holidays, and even when to take on an extra clinic or more space.
However, the reality for many health business owners is they don’t have much of an idea about their key numbers at all – and find themselves working long hours – missing family time – thinking they must keep working like a dog – just so they can afford to keep food on the table.
Many owners also get very little help or support from their accountants – as their yearly meeting (if they have one) is really only meant to make sure they are paying tax correctly and staying out of jail.
So you need to take your P and L calculations and analysis on as one of your key projects.
Do NOT simply hand over your P and L analysis to your accountant or bookkeeper – this is a recipe for disaster.
An essential part of your P and L is the payment of invoices as they come into your business.
You (and ONLY you) need to stay on top of each and every invoice that comes in and is paid in your business.
In my health businesses I personally checked, approved (and even paid) every invoice that came into my practice.
I suggest you do the same.
I remember one of my therapists once ordered over $1000 worth of clinic supplies because they were told they would save an extra 10% if they spent more than $1000.
I hit the roof – as you could imagine – as we only needed about $90 worth of the product in question.
However – the mistake was mine – for not putting procedures and protocols in place so this situation did not happen.
One of the protocols was that team members had to get personal approval from me for any purchase over $100.
The two things I never delegated in my business were my marketing – and my cheque book.
You worked long and hard to setup and build your health business – don’t make the mistake of throwing away valuable money on the back of poor supply purchases and excessive stock orders.
If you want to have better control of your business P and L – then take a good look at the P and L function inside the One Minute Practice – health business management program – which gives you instant access to your key financial numbers including:
- Rent as a % of gross
- Admin team wages as a % of gross
- Therapist wages as a % of gross
- Clinic supplies and expenses as a % of gross
And most importantly – Total Operating Profit and Profit as a % of Gross
You can see full details of the One Minute Practice program at http://www.oneminutepractice.com/ where you can also see a short video on how to use the P and L function in One Minute Practice effectively.
For even more details of how to calculate your P and L in real world terms – in my book “How to Run a One Minute Practice” – which you can order at:
http://www.oneminutepractice.com/booksales.php
Best Wishes
Paul Wright